EDITORIAL: Trump could blunder his way into a trade war

U.S. President Donald Trump gestures while speaking to reporters Monday in Washington. (EVAN VUCCI / AP)

Once again, Canada and other nations hold their breath as they wait to see just how much unnecessary damage U.S. President Donald Trump is prepared to do in the name of so-called “winning.”

Late last week, Trump declared he would soon levy punitive steel and aluminum tariffs — 25 and 10 per cent respectively — against the rest of the world in a bid to protect American steel and aluminum producers from unfair competition.

If he carries through with his threat, Trump will also be hurting American consumers while hobbling U.S. industries — which employ far more people than do the steel and aluminum sectors — that rely on those very metals in their businesses.

About 140,000 Americans work in the U.S. steel and aluminum sectors. More than six million are employed in businesses, like the auto sector and construction, that use steel and aluminum.

So Trump’s tariffs would inevitably result in higher prices for U.S. consumers, and those in other countries, including Canada, as well. By increasing costs for raw materials, those tariffs would also undercut the competitiveness of a broad swath of U.S. businesses, ironically making them more vulnerable to foreign competition.

However, lack of logic in any of Trump’s positions have been no guarantee he won’t stubbornly refuse to budge.

Some analysts hope Trump’s tariffs are simply a negotiating gambit to wring more concessions out of Canada and Mexico in current NAFTA talks. The president bolstered that theory by tweeting on Monday that Canada and Mexico could duck the tariffs only if the U.S. gets a “new & fair” trade deal.

But even if that’s so, Europe, Australia and other trading partners are already warning such tariffs could touch off a trade war, with retaliatory moves aimed at American exports.

And as Prime Minister Justin Trudeau has rightly observed, such tariffs simply make no sense in North America’s highly integrated economy, especially in areas such as the auto sector. Knowing the U.S. ultimately has as much or more to lose, Canada is unlikely to be bullied into making serious concessions at the NAFTA table to avoid Trump’s tariffs.

Former president George W. Bush tried steel tariffs back in 2002, though Canada was exempted. They were phased out early because they didn’t work and America’s trading partners were threatening billions of dollars worth of retaliatory measures.

In a trade war, all sides lose. Let’s hope Trump doesn’t have to find that out the hard way.